Ray v. Mechel Bluestone, Inc.

Filing 97

ORDER APPROVING SETTLEMENT, ATTORNEY FEES, AND ADMINSITRATIVE TERMINATION re: 94 MOTION by Michael Ray to Approve Notice of Final Settlement, Approve Attorney Fees, and Enter Administrative Termination Order: Approving the class Settlement, as se t forth in this Order, and directing that it be implemented in accordance with its terms; approving the plan set out for giving notice to the class; approving the attorney's fees and costs; directing that an Order of Termination be entered to allow for class administration. Signed by Judge Irene C. Berger on 3/13/2018. (cc: attys; any unrepresented party) (slr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
BECKLEY DIVISION
MICHAEL RAY, individually and on behalf
of all others similarly situated,
Civil Action No. 5:15-cv-03014
Honorable Irene C. Berger

Plaintiff,
v.
MECHEL BLUESTONE, INC.
and
DOUBLE-BONUS COAL COMPANY,
Defendant.

ORDER APPROVING SETTLEMENT, ATTORNEY FEES, AND
ADMINISTRATIVE TERMINATION
Pending before this Court is Plaintiff’s Motion to Approve Notice of Final Settlement,
Approve Attorney Fees, and Enter Administrative Termination Order. For the reasons set forth
herein, the Court APPROVES the final settlement, in accordance with the terms stated in this
Order, and ORDERS that the attorney fees and costs are fair and reasonable and that the Plaintiff
should be directed to issue notice to the class members of their rights under this Order.
I.

PROCEDURAL BACKGROUND

On May 3, 2016, this Court certified this matter as a class action pursuant to Federal Rule
of Civil Procedure 23(b)(3). The parties mediated the case twice with the assistance of the
Honorable Omar Aboulhosn, achieving success when they entered a Mediation Agreement on
January 20, 2017. (ECF 88). The Parties have agreed to final terms of a Settlement Agreement
as follows:
The parties have agreed to settle this matter pursuant to the following agreed-upon terms:

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1. Defendants agree to pay to Plaintiffs the sum of $300,000 inclusive of attorney fees,
costs, class administration fee, and class representative fee. The settlement sum will
be divided as set forth below.
2. Call-Back List. Within 60 days after notice of this settlement agreement issues, class
members may notify the class counsel whether they wish to be placed on a Call-Back
List from which they shall be returned to employment on the basis of their seniority at
the Double Bonus Mine, as outlined in this Agreement.
a. Seniority. The List Members shall be ranked in accordance with the seniority
that they had earned at the Double Bonus Mine prior to their final layoff at that
mine.
b. Covered Mines. List Members shall be considered for every full-time job at the
next three underground coal mines, inclusive of preparation and refuse facilities
serving those mines, at which no collective bargaining agreement is in place at
the time of hiring List Members, that the Bluestone Entities control or operate,
in McDowell, Wyoming, Mercer, or Raleigh Counties, W.Va. (the “Covered
Mines”).
i. The hourly wage rate of such jobs must be equal to or greater than
Twenty-Eight Dollars ($28.00) per hour for the first year of a List
Member’s employment there.
ii. If a Covered Mine ceases operation within a year of hiring a List
Member, such mine ceases to be a Covered Mine and the Defendants
must honor the call-back obligations under this Agreement at one
additional Covered Mine that is next opened by the Bluestone Entities.
iii. Mechel Bluestone, Inc., Bluestone Resources, Inc., Bluestone
Industries, Inc., Dynamic Energy, Inc., Gilbert Mine, Inc., JCI Coal
Group, LLC, and coal-producing divisions thereof, and wholly owned
and controlled coal producing subsidiaries and wholly owned and
controlled coal producing affiliates, or other subsidiaries and affiliates
wholly owned and controlled by principals of Defendants, shall be
treated as one and the same Bluestone Entities for purposes of the
Covered Mines and this Agreement.
iv. If a training opportunity is available at a Covered Mine, the Defendants
must inform eligible List Members of such opportunity in sufficient
time for such List Members to participate in the training.
c. Recall Rights. When a job opportunity exists at the Covered Mines, the
Defendants will review the List and shall recall to employment, in the order of
their seniority, List Members with the ability to perform the work of such job.
i. Defendants shall inform List Members of call-back opportunities by
means of both certified mail and telephone message delivered to the
addresses and numbers provided by class counsel or the class members
themselves.

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ii. A List Member who does not return to work after receiving offers at
each of the Covered Mines shall sacrifice his seniority on the list and
shall have his name removed from the list.
iii. Any person on the list who secures other employment during the period
when no work is available for him at the Covered Mines shall in no way
jeopardize his seniority while engaged in such other employment. Upon
receipt of notice of a call-back opportunity, List Members will have five
business days to accept or reject each such opportunity.
d. Settlement of Disputes Regarding Recall Rights.
i. Disputes arising regarding a List Member’s recall rights shall be
resolved as follows.
ii. An earnest effort shall be made to settle differences at the earliest
practicable time.
iii. At all steps of the dispute process, the party initiating the dispute shall
disclose to the List Member and to Class Counsel a full statement of the
facts relied upon by them.
iv. If no settlement is reached within 7 days of the nondisputing party
receiving notice of the dispute, the parties shall reach mutual agreement
on an arbitrator within the following 7 days. At the earliest possible
time, but no later than 15 after referral to him, the arbitrator shall
conduct a hearing in order to hear testimony, receive evidence and
consider arguments.
v. The costs of arbitration shall be borne by the disputing party.
vi. No Class Member may be excluded from the List except for just cause.
vii. No List Member may be denied a recall opportunity for a job if they are
able to perform the work of such job.
viii. List Members shall be entitled to be present at any conference, meeting,
or hearing regarding a dispute as to their recall rights.
3. Payment to Class Members. Class Members who are not List Members shall each
receive from Defendants a sum of Three Thousand and Forty-Six Dollars and EightySeven Cents ($3,046.87) plus an additional amount of Excess Funds as specified below.
4. Attorney Fee. Class counsel will receive an attorney fee of Seventy Thousand Dollars
($70,000.00).
5. Class Administration. Class counsel will receive an administrative fee of TwentyFive Thousand Dollars ($25,000.00) to administer the settlement.
6. Class Representative. Defendants agree to pay to Michael Ray a class representative
fee of Ten Thousand Dollars ($10,000.00). This amount shall be in addition to his right
to claim an individual member settlement under Paragraph 3, and Excess Funds.

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7. Excess Funds. Any excess funds that remain from the settlement amount of $300,000,
less payments to class members in Paragraph 3, less Attorney’s Fee in Paragraph 4, less
Class Administration in Paragraph 5, and less Class Representative Fee in Paragraph
6, shall be considered the “Excess Funds.” Those Excess Funds shall be divided
equally among all the Class Members who do not opt to be List Members. However,
in no case may a distribution of Excess Funds, when added to a payment under
Paragraph 3, cause any Class Member to receive more than $11,000.00 in a total gross
individual settlement award.
8. Periods for Performance.
a. One Hundred and Fifty Thousand Dollars ($150,000.00) has been paid by the
Defendants and held in trust by Class Counsel pending approval of this Order.
b. One Hundred and Fifty Thousand Dollars ($150,000.00), plus interest
calculated daily and compounding annually at a rate agreed upon by the parties,
running from January 19, 2018 until the time of payment, shall be paid to Class
Counsel in a lump sum by the Defendants by no later than Monday, February
26, 2018, and held in trust by Class Counsel pending approval of this Order.
Class Counsel will initiate notice of the final settlement within seven days of
the approval of the Settlement and will allow for class members to retrieve
payments as set forth in the Notice of Final Settlement.
The Agreement provides for payments of a minimum of $3,046.87 to each of sixty-four
class members, and alternately provides those class members the option to be placed on a CallBack List with recall rights at various mining operations, based on the miners’ seniority status at
the Double-Bonus Mine No. 65, in lieu of receiving payment. (Id.). If miners opt to participate
in the settlement by being placed on the Call-Back List, they shall possess recall rights on that
List, based on their Double-Bonus mine seniority. The Agreement also provides that the class
representative would receive a fee of $10,000.00, the class would be administered by class
counsel for a fee of $25,000.00, and the attorney fee for class counsel would be $70,000.00. (Id.
at 4). Due to the passage of time since the initial Mediation Agreement, the parties have agreed
that the 60 days for class members to opt for the Call-Back List shall run from the date that the
Final Notice of Settlement is mailed by the Class Counsel and that all elections are final after
those 60 days.
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On March 22, 2017, this Court Ordered that Plaintiff’s Motion for Preliminary Approval
of Settlement be granted, that the Mediation Agreement be approved pending the final settlement
hearing, and that Plaintiff’s proposed plan for providing class notice of the Mediation Agreement
be approved. (ECF 92). Plaintiff provided notice to the putative class members of the Fairness
Hearing by U.S. Mail to each class member listed and agreed upon by the parties. (ECF 94-3 at
46) (Expense Entry No. 234006, noting sixty-four letters issuing court-approved notice).
On May 24, 2017 the Plaintiff appeared before the Court for the Fairness Hearing, and
presented the Mediation Agreement reached by the parties in this matter. At the Fairness
Hearing, the Court indicated its approval of the agreement subject to issuance of a final order
making findings under Rule 23(e) and giving effect to that approval. (ECF 93) (District Judge
Daybook Entry). Thereafter, the Plaintiff submitted documentation to support the parties’
assessment of the reasonable attorney fees and costs, and filed therewith the pending Motion to
Approve Notice of Final Settlement, Approve Attorney Fees, and Enter Administrative
Termination Order. (ECF 94). The pending Motion, being unopposed, is ripe for review.
II.

LEGAL STANDARD

Rule 23(e) governs the compromise and settlement of class action matters. When a
proposed classwide settlement is reached, it must be submitted to the court for approval. In
addition, class members must be notified of the proposed settlement, so that members have the
opportunity to object to settlement in a scheduled hearing.
Rule 23(e) provides:  “A class action shall not be dismissed or compromised without the
approval of the court, and notice of the proposed dismissal or compromise shall be given to all
members of the class in such manner as the court directs.” Fed. R. Civ. P. 23(e).

This rule

requires a court to independently and objectively analyze the evidence and circumstances before

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it in order to determine whether the settlement is in the best interest of those whose claims will
be extinguished. In re General Motors Corp. Pick-up Truck Fuel Tank Products Liability
Litigation, 55 F.3d 768, 31 Fed. R. Serv. 3d 845 (3d Cir. 1995); Air Line Stewards and
Stewardesses Ass’n, Local 550, TWU, AFL-CIO v. American Airlines, Inc., 763 F.2d 875 (7th
Cir. 1985); cf. 2 Newberg & Conte on Class Actions § 11.41, at 11-88 to 11-89.
“Under Rule 23(e) the district court acts as a fiduciary who must serve as a guardian of
the rights of absent class members. [T]he court cannot accept a settlement that the proponents
have not shown to be fair, reasonable and adequate.” Grunin v. International House of Pancakes,
513 F.2d 114, 123 (8th Cir.) (emphasis added), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46
L.Ed.2d 93 (1975); Malchman v. Davis, 706 F.2d 426, 433 (2d Cir.1983); Sala v. National RR
Passenger Corp., 721 F.Supp. 80 (E.D.Pa.1989); see also Piambino v. Bailey, 610 F.2d 1306
(5th Cir.), cert. denied, 449 U.S. 1011, 101 S.Ct. 568, 66 L.Ed.2d 469 (1980).
The U.S. Supreme Court has noted with reference to court approval of class action
settlements:
Courts judge the fairness of a proposed compromise by weighing the plaintiff’s
likelihood of success on the merits against the amount and form of the relief offered in
the settlement. See Protective Committee for Independent Stockholders of TMT Trailer
Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25, 88 S. Ct. 1157 [(1968)]. They do not
decide the merits of the case or resolve unsettled legal questions.
Carson v. American Brands, Inc., 450 U.S. 79, 88, n. 14, 101 S. Ct. 993 [(1981)].
Presumption of fairness. There is an initial presumption of fairness when a proposed
class settlement, which was negotiated at arm’s length by counsel for the class, is presented for
court approval. See e.g. In re General Motors Corp. Pick-up Truck Fuel Tank Products Liability
Litigation, 55 F.3d 768, 31 Fed. R. Serv. 3d 845 (3d Cir. 1995). Approval of a proposed
settlement is discretionary with the court. However, the court should not give rubber-stamp
approval.
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The initial presumption of fairness of a class settlement may be established by showing:
1. That the settlement has been arrived at by arm’s-length bargaining;
2. That sufficient discovery has been taken or investigation completed to enable counsel and
the court to act intelligently;
3. That the proponents of the settlement are counsel experienced in similar litigation; and
4. That the number of objectors or interests they represent is not large when compared to the
class as a whole.
See id.
Procedural aspects of Rule 23(e). Procedurally, Rule 23(e) provides for the following:
(1) The court must direct notice in a reasonable manner to all class members who would
be bound by the proposal.
(2) If the proposal would bind class members, the court may approve it only after a
hearing and on finding that it is fair, reasonable, and adequate.
(3) The parties seeking approval must file a statement identifying any agreement made in
connection with the proposal.
(4) If the class action was previously certified under Rule 23(b)(3), the court may refuse
to approve a settlement unless it affords a new opportunity to request exclusion to individual
class members who had an earlier opportunity to request exclusion but did not do so.
(5) Any class member may object to the proposal if it requires court approval under this
subdivision (e); the objection may be withdrawn only with the court’s approval.
III.

ANALYSIS

Approval of the settlement. The parties have tendered an agreement that provides
flexibility to the class members to participate in the settlement by claiming a cash award that
represents a substantial discount on the risk of going to trial. However, the value of the
settlement to the class members is further enhanced through the alternate method by which class
members may participate in the settlement agreement. That is, in lieu of accepting a cash
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payment, each class member may opt to place his or her name on a Call-Back List and to
exercise recall rights at certain coal mining operations based on the seniority rank that the class
members held at the Double-Bonus Mine No. 65. This Call-Back List and recall right represents
a process akin to a so-called “panel agreement,” in the parlance of the trade union movement.
This Call-Back List allows miners to transfer to a new coal mine and continue earning wages and
benefits---a value that far exceeds the mere two months of wages that the miners are able to
recover via the WARN Act. The value of regaining a job in the mining industry, and reclaiming
their ability to earn benefits during active employment and possibly retirement as well,
represents an additional source of value for the Class Members under this agreement that is
substantial.
As set forth herein, the Court finds that the settlement provides flexibility to the class
members, affords them a variety of means to access substantial value in exchange for the
compromise of their claims, and is consequently in the best interest of those whose claims will
be extinguished. In re General Motors Corp. Pick-up Truck Fuel Tank Products Liability
Litigation, 55 F.3d 768, 31 Fed. R. Serv. 3d 845 (3d Cir. 1995); Air Line Stewards and
Stewardesses Ass’n, Local 550, TWU, AFL-CIO v. American Airlines, Inc., 763 F.2d 875 (7th
Cir. 1985); cf. 2 Newberg & Conte on Class Actions § 11.41, at 11-88 to 11-89.
At the Fairness Hearing, the Class Counsel tendered an unrefuted proffer that the settlement
was arrived at by arm’s-length bargaining. Upon reviewing the record, the Plaintiff’s issuance of
two sets of interrogatories and requests for production, (ECF 14, 44), the Defendants’
productions of evidence in response thereto, and the substantial evidence that the Plaintiff
produced through investigation and filed in support of the Motion for Class Certification (ECF
18, Exhibits 1-15) (Exhibits to Plaintiff’s Reply to Defendant’s Opposition to the Motion for

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Class Certification), the Court finds that sufficient discovery was taken or investigation
completed to enable counsel and the court to act intelligently. The Court finds that the
proponents of the settlement are adequately experienced in litigating and resolving WARN Act
claims based on the four class actions under the WARN Act, and the two settlements negotiated
in connection with those actions, that are pending the Southern District of West Virginia. The
Court notes that the mining operations at issue in this case are of a relatively limited size and
extent. (ECF 18-7) (Employment Records from U.S. Department of Labor indicate that DoubleBonus Mine No. 65 employed between 54 and 71 miners during the third and fourth quarters of
2013, which comprise the period within which the layoff of the 64 class members occurred).
The Court further finds that, especially considering that there were no objectors at the Fairness
Hearing, the number of objectors and the interests they represent is not large when compared to
the relatively limited size and extent of the class as a whole.
Notice of final settlement. The Plaintiff has proposed to direct notice in a reasonable
manner to all class members because Plaintiff proposes to provide direct written notice by U.S.
mail to the known addresses of each class member. The Plaintiff also intends to provide notice
of the final settlement to the union that represented the class members at the site where the layoff
occurred and to the Beckley office of WORKFORCE West Virginia. Plaintiff and Defendants
have ascertained by agreement a list of sixty-four class members covered by the settlement.
(Exhibit A) (Class List). Class Counsel represents that they have made substantial efforts
throughout the course of this litigation to maintain a current list of mailing addresses and
telephone numbers of class members in order to ensure the efficacy of notice.
These methods of notice satisfy the “best notice practicable under the circumstances” and
conform to the due process requirements for class members who are unknown or who do not

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receive actual notice. See In re Serzone Products Liability Litigation, 231 F.R.D. 221
(S.D.W.Va. 2005); see also Long v. Nationstar Mortgage, LLC, 2016 WL 1229107 (S.D.W.Va.
March 28, 2016). The Court therefore approves the revised Final Notice of Settlement that is
attached to this Order, and approves its completion and issuance by the Class Counsel. (Ex. A).
Attorneys fees and costs. The detailed billing records set forth by the Class Counsel
represent sufficient evidence of the reasonableness of the agreed-upon settlement allocating
$70,000.00 to the Class Counsel as fees for their representation of the Class. The billed time in
this case exceeds the amount allocated to the Class Counsel as fees. (ECF 94-3). As noted
above, while the cash side of the settlement in this case represents a compromise on the full
value of the claims, the non-cash Call-Back option under the settlement represents a value that is
effectively much larger than the full cash value of the claims for those who seek re-employment
in the coal mines. The hourly rates attested in the Class Counsel’s fee affidavit are reasonable
and commensurate with those charged in the local market for lawyers of comparable experience
and expertise. (ECF 94-4). For those reasons, the Court finds that the fees are reasonable in the
market and commensurate with the degree of success achieved by the Plaintiff on behalf of the
Class.
IV.

CONCLUSION

Wherefore, after careful review and consideration, the Court finds that:
1) The settlement agreement is fair, reasonable and adequate to the Class Members
pursuant to Rule 23(e), inclusive of the fees for the class representative and
administrator;
2) The settlement agreement has been negotiated at arm’s length between competent,
able counsel, and no collusion existed in connection with the settlement agreement;

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3) The record is sufficiently developed and complete to have enabled Plaintiffs and
Defendants to evaluate and consider their positions;
4) The proposed method of notice to absent class members is calculated to provide the
“best notice practicable under the circumstances” and thus satisfies the requirements
of due process as to unknown class members who did not receive actual notice; and
5) The attorney’s fees and costs are found to be reasonable, adequately-documented by
time records submitted on the record, and commensurate with the degree of success
achieved by the class in this case.
ACCORDINGLY, IT IS HEREBY ORDERED:
1) The class Settlement, as set forth in this Order, is hereby approved and shall be
implemented in accordance with its terms;
2) The plan set out for giving notice to the class is hereby approved;
3) Attorney’s fees and costs are found to be reasonable and are hereby approved;
4) An Order of Termination shall be entered to allow for class administration.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and to
any unrepresented party.
ENTER:
__________________________________
THE HONORABLE IRENE C. BERGER

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Prepared by:

Agreed to by:

/s/ SAMUEL B. PETSONK
Samuel B. Petsonk (WVSB # 12418)
Bren Pomponio (WVSB # 7774)
Mountain State Justice, Inc.
223 Prince Street
Beckley, WV 25801
[phone]
[phone] (fax)
Class Counsel

/s/ JOHN HUSSELL
John Hussell (WVSB # 6610)
Andrew Ellis (WVSB # 10618)
John D. (Jody) Wooton, Jr. (WVSB #
10512)
WOOTON, DAVIS, HUSSELL & ELLIS,
PLLC
105 Capitol Street, Suite 300
PO Box 3971
Charleston, WV 25339
[phone]
[phone] (fax)
[e-mail]
[e-mail]
[e-mail]
Counsel for Defendants

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